Under The Radar – 04 February

This week, we discuss:

1. Downing Street on charm offensive for big tech listings

2. Biden to face far-right mid-term onslaught

3. Vice secretly organizes Saudi ‘influencer festival’

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Downing Street on charm offensive for big tech listings

What Happened? In a bid to preserve London’s status as the global pre-eminent trading hub, ministers have set out to woo buy-now-pay-later giant Klarna to list on the London Stock Exchange.

What does it mean?

Ministers have been busy courting some of Europe’s largest tech companies, amid fears that high-growth companies are snubbing the City of London for New York. The guest-list of high valuation fintechs that attended a virtual meeting with Number 10 this week tallied up to a total valuation of $102bn. Target number one is Klarna, the Swedish fintech company who have made it big in the Buy Now, Pay Later game. The company is valued at £34bn, making it a potential big-ticket winner for the London Stock Exchange.  Ministers are touting the post-Brexit opportunities London apparently offers as a way to woo Europe’s big tech companies after an overhaul of the UK’s listing regime last year.  It is not the first time that the government has stepped in to make a bid for big tech listings. Last year, the UK government took a hands-on-approach to Deliveroo’s listing, and even committed to rule changes that would allow founders to keep more control of their companies in a bid to secure Deliveroo’s £5bn stock market listing. The listing infamously went down like a lead-balloon, with the stock price plummeting on its debut day on the stock exchange.  The government will be hoping to avoid a repeat of any similar incidents if they are to woo the fintech world and secure London’s spot as the tech capital of the world.

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Biden to face far-right mid-term onslaught

What happened? In this year’s midterm elections, a large contingent of far-right candidates threaten to reopen the Trumpist wounds of the January 6th insurrection. What does it mean?

The Anti-Defamation League, a not for profit that monitors hate groups, is claiming that over 100 far right candidates will be running for office in November’s midterm elections under the Republican banner.

While some are establishment figures shallowly co-opting far-right rhetoric, like Harvard graduate JD Vance, others have concrete links to white supremacist groups and extremist organisations, including the Proud Boys. Far right candidates aren’t just targeting incumbent Democrats to erode Biden’s political power, they are also trying to unseat incumbent Republicans who they find disagreeable.  More worryingly, some candidates are running for bureaucratic positions that are responsible for certifying elections. They would likely look to undermine trust in a Biden 2024 win.  The far-right phenomenon is a dangerous sign for American democracy, once again driving politics to its spectral fringes, showing that Biden has not been the unifying figure that would begin the healing process that many had hoped for. This far right onslaught, if successful, would lay the foundations for a Trumpist candidate, if not a return of the man himself, in the next Presidential election. Another interpretation, however, could be that the success of the far right is a failure of the centrists in the Republican Party, devoid of ideas as to how to move on from Trumpism. Biden could even benefit from this in the midterms, forgiven for perceived covid failures due to fears of a return to the extreme political battlegrounds that resulted in the Jan 6th insurrections.

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Vice branded as hypocritical for secretly organising Saudi ‘influencer festival’

What happened?

Despite efforts to keep their involvement secret, it has emerged that Vice, the youth media company, was responsible for organising the Saudi government funded Azimuth music festival in March 2020. Vice publicly announced it would be ceasing its activities in the Middle Eastern Kingdom following the high-profile murder of Jamal Khashoggi in 2018.

What does it mean? The extravagant government-funded Azimuth music festival, dubbed the ‘influencer festival’, promised to bring together the best of music, art and food, merging “all that is Arabian with all that is Western”.  While you would not be mistaken for thinking that a Western-style festival in a deeply conservative nation is incompatible, this is part of Crown Prince Mohammed Bin Salman’s (MBS) wider attempts to reform the nation’s economic and socio-cultural life and place it at the centre of a modern Middle East.  A prime example is MBS’s ultimatum to international companies that the Kingdom would stop doing business with those who do not have their regional headquarters in Riyadh. In this context, Vice’s u-turn reflects the irresistible nature of the lucrative contracts that the Saudi government offers – especially when like Vice, you are under pressure from shareholders to turn around declining revenues.  Despite opposition from staff, Vice’s response to the revelations only confirms these suspicions, with the media company setting up a dedicated office in Riyadh last year.  Speculation has been rife over whether MBS’s ambitious reforms should be taken at face value. In truth, there have been some minor reforms that lend some credibility to the modernising agenda, but it is still little more than window dressing for what remains a feudal society with vast socio-economic inequalities.  

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This Week’s Must Reads

1. “Beijing Olympics: the new front line in the US-China cold war” by Demetri Sevastopulo et al. for The FT

2. “Johnson’s hypocrisy and lies are emblematic of the British establishment” by Owen Jones for The Guardian

3. “Energy bills: How Boris Johnson is still caught in a trap laid by Labour’s Ed Miliband” by Gordon Rayner for The Telegraph

4. “Levelling up won’t save Boris Johnson” by Harry Lambert for The New Statesman

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Under The Radar – 28 January

Photo by lan deng on Unsplash

This week, we discuss:

1. The Big Cats set to unite in UK-India trade deal

2. 808s & Heartbreak for Gap?

3. The battle to censor social media

The Big Cats set to unite in UK-India trade deal

What Happened? Talks between Anne-Marie Trevelyan, the UK’s International Trade Secretary, and Piyush Goyal, India’s Minister of Commerce and Industry, are said to be progressing well as new Resolution Foundation analysis suggests Britain can gain first-mover advantage in India by striking a deal.  What does it mean?

The Resolution Foundation report predicts that the gains from a UK-India trade deal could be on par with those from a future trade agreement with the US, as negotiations over the latter have ground to a halt due to Brexit complications. The report does note, however, that the UK economy may face tougher competition as Britain’s business service firms could be undercut by lower-cost Indian alternatives. In May 2021, Boris Johnson met virtually with Indian Prime Minister Narendra Modi to announce a historic commitment to strengthen and welcome a new era in bilateral relations. The UK Government’s trade policy pivot to the Indo-Pacific region is indicative of its recognition of the significant growth potential in countries such as India, a traditionally tough market to crack due to strict domestic regulations. Looking to reinforce its ‘Global Britain’ image, the UK is also seeking membership of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which includes nations like Canada, Australia, and Japan. If the UK were to be successful, they would be the first European state to join the 11-nation group, yet the potential benefits of a deal with India would outweigh the benefits of gaining CPTPP membership – as would the risks. The uncertainty associated with India’s rapidly evolving economy is a price Johnson’s government must pay in return for access to what will be the world’s third-largest import market by 2050. The juicy first-move advantages, granting UK businesses competitive advantage over exporting firms in other Western nations without preferential access to India, may well be enough to convince our current administration to act now.

808s & Heartbreak for Gap?

What happened? When Kanye West, the ever-controversial rapper, announced his ten-year partnership with family-friendly American retailer Gap, eyebrows were raised. Surprisingly, it now looks as if the marriage isn’t going quite to plan. What does it mean?

Kanye’s decision to collaborate with Gap, while out of left field, offered a potentially beneficial partnership for both sides. West could present his branding in a more affordable way to a larger market, while Gap had the opportunity to rejuvenate its image after close to two decades of declining sales. An added bonus for Gap was that West is a self-marketing machine. The business models of the two couldn’t be more different. Kanye’s foray into the fashion industry has resulted in various collaborations with high profile brands as well as regular attendance at high end fashion shows. Gap, on the other hand, markets itself as an affordable, high street clothing brand. So, what has “this generation’s closest thing to Einstein” (in his own words), brought to the mid-level clothing brand so far? Not much, as it turns out. Mr West, who actually worked at a Gap store before he became famous, has released just two products in eighteen months under the Yeezy Gap branding. Gap is reportedly frustrated with the slow rollout, yet they may soon be appeased with a Balenciaga collaboration set to be announced. Kanye’s history of erratic and impulsive music releases, which have seen him delay and cancel projects, means Gap may just have to accept an inconsistent rollout. But eighteen months into the collaboration, and with net sales down 12% in 2021 compared to 2019, it’s difficult to see whether it will ever be worth it.

The battle to sensor social media

What happened?

Twitter has revealed that a record 43,387 demands to remove content were made by governments around the world between January and June last year. What does it mean? This time last year, Twitter sparked a heated debate after they permanently banned Donald Trump’s account in the wake of the Capitol insurrection. A year later, and the topic of censorship is back on the table, but this time, the table has well and truly turned. 95% of the legal demands came from just five countries. Surprisingly, Japan leads the pack, followed by more obvious authoritarian culprits – Russia, Turkey, and India, with another East Asian democracy, South Korea, rounding off the list.   Whilst the United States did not find itself at the top of the table in this category, it is the undisputed invasion of privacy champion, finding itself as the single largest source of government information requests. Despite Twitter’s attempt to appear defiant in their statement, accusing these governments of being a “threat to privacy and freedom of expression”, records revealed that the social media site ‘withheld’ access to content, or required reported accounts holders to remove the content, in over half of the demands made by government officials. The debate over big tech and government intervention has been simmering for some time now, and it appears that threats from politicians to clampdown on social media has seen Twitter rollover more often than not. We are in the era of social media censorship, whether it’s the private sector or state who reigns supreme remains to be seen.

This Week’s Must Reads

1. “How the Ukraine question divides the American right” by Janan Ganesh for The Financial Times

2. “Is Wes Streeting the next Labour leader?” by Ailbhe Rea for The New Statesman

3. “Boris Johnson is the problem, not his underlings” by Daniel Finkelstein for The Times

4. “The abandoned revolution: has the government given up on Brexit?” by Ross Clark for The Spectator

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Under The Radar – 21 January

This week, we discuss:

1. A race to the bottom on the high street

2. All hail the long weekend

3. Macron strokes the Bear

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A race to the bottom on the high street

What Happened? Associated British Foods (ABF), the owner of high street fashion chain Primark, is reportedly planning to cut 400 of its staff due to increases in the cost of energy, logistics and commodities. Primark does not have an online operation, which explains why its sales have plummeted during a two-year cycle of lockdowns and restrictions.

What does it mean?

There are two key takeaways from this. First, brick & mortar stores must at least partially digitalise to remain competitive. Second, the cost-of-living crisis hurts businesses as well as it does workers. The data also proves that the pandemic has prompted irrevocable change on consumer behaviour, with Primark’s like-for-like sales still 10 per cent lower in the sixteen weeks to January 8 compared to pre-pandemic levels. However, ABF’s finance chief has said that Primark will not increase its prices, despite rivals like M&S and Next already planning a hike of up to 6% by the end of this year. Primark clearly sees an opportunity to attract increasingly cash-strapped consumers by inflation proofing their already bargain priced clothes range. ABF also own grocery and agricultural businesses, which, according to analysts, have acted like a safety net of sorts for the company. With continuous supply chain disruptions, it has been difficult to predict which commodities will become more difficult to buy and sell, but a diverse portfolio has helped AB Foods weather the storm. This year, as the pandemic slows down and daily life hopefully normalises, retail is expected to make a comeback. However, it remains to be seen whether Primark’s strategy of cutting jobs and freezing prices will be enough to make its operations profitable in an increasingly digital marketplace.

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All hail the long weekend

What happened? A six-month trial of a four-day working week has begun in the UK, which will see staff at 30 (lucky) firms work four-day weeks on the same salary. What does it mean?

Jeremy Corbyn eat your heart out. Oft-discussed but dismissed by most as nothing more than a pipe dream, the four-day working week has taken a step closer to reality with a new trial organised by the not-for-profit ‘4 Day Week Global’. Lockdowns and working from home orders have fuelled calls for a ‘four-dayer’, with employees increasingly valuing a better work-life balance and the chance to work flexible hours. Participating companies and organisations will trial the revamped working week with no loss in pay for employees based on the principle of the 100:80:100 model, where staff work at 100% productivity for 80% of the time, but still receiving 100% pay. Numerous studies have shown that moving to a four-day week actually boosts productivity and staff wellbeing. In 2019, Microsoft trialled a four-day week in their Japan offices with productivity levels shooting up by 40%. In the UK, camera company ‘Canon’ are probably the best-known firm to already have adopted some level of four-day working. During the trial, researchers will work with organisations to measure the impact on productivity, as well as the wellbeing of staff, and the impact on other factors such as gender equality. With women historically taking on the majority of the housework, flexible working has helped get more women into the workforce. According to data from the Resolution Foundation, female participation rates have increased by 0.4% since the pandemic hit. In an era of “new normals” could the four-day week be the next? Trafalgar’s ears are perked…

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Macron strokes the Bear

What happened?

French President Emmanuel Macron has called for the EU to negotiate directly with Russia, subverting the US and NATO in the face of escalating tensions over Ukraine.

What does it mean? In news that will be ‘muzyka’ to Putin’s ears, a disconnect between Western leaders has emerged over the most effective way to deal with Russia’s increasing hostility with Ukraine. Macron has floated the idea of the EU forging a ‘security pact’ with the Eastern superpower but this will surely anger Biden & Co. who have been urging unity in the face of the Russian bear.

In a speech to the European Parliament, Macron called for the EU to “conduct their own dialogue” with Russia rather than back the diplomatic pursuits of the US and NATO. Macron’s attempts to muscle in are true to form as he continues to strengthen his grip on the unofficial position of Europe’s leader, recently vacated by Angela Merkel.

This division amongst the Western powers pre-empts US Secretary of State Antony Blinken’s planned meeting with his Russian opposite Sergei Lavrov in Geneva this Friday. Blinken had been calling for ‘unity’ amongst the West.

Despite Western fractures, it has been reported the Putin regime wants to deal with the US directly. Inwardly the EU has struggled to agree on the level of Russian aggression that should trigger EU sanctions. This should come as no surprise considering the varying degrees of Russia’s economic influence felt throughout the European community.

Putin has long seen NATO expansionism as a threat to Russia’s national security so should Ukraine’s bid to join the alliance be accepted, the Russian premier’s aggressive form of ‘self-defence’ will likely escalate.

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This Week’s Must Reads

1. “Why Boris Johnson’s No.10 is so dysfunctional” by Harry Lambert for The New Statesman

2. “Business leaders have to play a better political role” by Martin Wolf for The Financial Times

3. “After Biden’s first year, the US economy is surprisingly healthy. His prospects are not” by Adam Tooze for The Guardian

4. “Newest intake of MPs are turning against Boris Johnson” by Mhari Aurora for The Times

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